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State To Decide On Proposed Hospital Expansion Plans

Ruby de Luna
11/05/2010

If you were planning a community you'd need services like schools, fire, police and a hospital. As the community grew, so would the demand for these services. Across western Washington, hospitals are expanding because the region is growing. In southeastern King County, the medical centers in Renton and Auburn have had to turn away patients because there aren't enough beds. Now three health care providers are competing to fill that need. But as KUOW's Ruby de Luna explains, adding more hospital beds isn't a simple solution.

TRANSCRIPT

Valley Medical Center, Auburn Regional Medical Center and MultiCare of Tacoma want to expand in southeast King County. Their proposals would collectively bring 188 new beds to the area. All three say population growth and demand for medical services are driving their need to expand. But growth and demand alone aren't enough to convince the state to grant their applications. Bart Eggen is with the State Department of Health. His office evaluates hospital expansion plans under the Certificate of Need program.

Eggen: "If you spend a day in the hospital, it's terribly expensive. What the Certificate of Need tries to do is make sure that we don't have excess capacity that's sitting out there that's driving up costs of care."

When the state reviews requests for additional hospital beds, it also takes other considerations into account. It evaluates whether the extra beds will be used, and whether the hospital can financially sustain operations in the next decade and beyond.

Eggen: "Also, make sure the staff levels can be appropriate, the operators of the facility are generating enough revenue that they can buy the supplies, keep payroll going like any other business at sufficient level to afford the highest quality of care to the people in the community."

The department could approve all three proposals, or turn them down, or something in between. There's a reason why the state regulates hospital expansions. More isn't always better. If you think about retail, more stores encourages competition. You can see this when there are clusters of gas stations near each other. The idea behind that business model is a big marketplace offers consumers choice and drives prices down.

Katz: "It just doesn't work that way, never has in health care, because it's not a marketplace like that."

Aaron Katz is principal lecturer at the University of Washington's School of Public Health. Katz says the demand–supply model that we learned in school doesn't apply in health care for a number of reasons. Sure there's going to be a steady stream of customers, especially as the population ages. The number of people who are 65 and older is growing. They usually require more medical services and longer hospital care.

But here's the kicker: that's not enough. Medicare doesn't pay much, and reimbursements are expected to shrink in the coming years as the government tries to cut health care spending. So health care providers try to balance things out with patients who use private insurance. But Katz says that's no guarantee either.

Katz: "Most of those patients are covered by employer–based insurance. Employers are in the same economy that hospitals are, they're worried about increasing the cost of health care. They're thinking about how to reduce or control how much they spend in health care."

Another reason why the business model for retail doesn't work in health care is that as consumers, we don't have as much control over the services we use. Going back to the gas station example, when we're running low on gas we can choose to fill up at any gas station, whenever we want to.

But in health care, just because there are hospital beds available, it doesn't mean anyone can just walk in and get treatment. Let's say your hip hurts.

Katz: "I can't go to Swedish Hospital and walk into the radiology department and say I want an x–ray of my hip."

Katz says that's because there a number of middle people involved. There's the physician who determines what procedures are necessary to treat the hip problem.

Katz: "I can't go into the OR and say, start operating."

And there's the insurance companies, Medicare or Medicaid. They hold the purse strings and make the final decision. That's why the state has an interest in regulating new hospital construction. It has to determine how more beds in the system will affect quality of care, patient access and cost.

The State Department of Health is expected to make a decision on the proposed hospital expansion plans next week.

I'm Ruby de Luna, KUOW News.

© Copyright 2010, KUOW

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